Download New financial institutions in German Statutory Health Insurance

New financial institutions in German
Statutory Health Insurance (SHI): are they
consistent with its overall goal?
Thomas Nebling
Department of Strategic Contract- and Healthcare-Management,
Techniker Krankenkasse, Hamburg, Germany
EHMA Annual Conference 2008 – „The Politics of Health“
Agenda
1 Some basic facts about German SHI
2 How do sickness funds invest in health?
3 New financial institutions in German SHI
4 Conclusions
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Some basic facts about German SHI
Overall goal
The overall goal of SHI is defined in § 1 Social Code Book V as
"to maintain, recover or improve people's health"
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Some basic facts about German SHI
Organization
 SHI is covered by about 210 sickness funds
 Sickness funds are public bodies with self-government
 Competition in SHI-market as insurants can choose freely
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Some basic facts about German SHI
Financing
Old World until 31.12.2008
 Financing based on income of SHI-members
 Each sickness fund raises its own individual contribution rate
(average at 14.0 per cent)
 Contribution covered by both employer and employee each
with 50 per cent
 Members pay additional contribution rate of 0.9 per cent
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Agenda
1 Some basic facts about German SHI
2 How do sickness funds invest in health?
3 New financial institutions in German SHI
4 Conclusions
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How do sickness funds invest in health?
Investments in health (intangible assets)
 In economics, assets are generally everything that generates
return/gain/value in future
A
good state of health
low morbidity level
poor state of health
high morbidity level
B
Moving from (B) to (A) (Improving state of health / Reduction
of morbidity level)  Outcome
= intangible asset
 Assumption: the higher this intangible asset, the better the profit margin for
the sickness fund (= return on investment, ROI)
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How do sickness funds invest in health?
System theoretical model of the healthcare system
Resources of
sickness fund
Throughput
Input
Investments
Structures
Processes
Technologies
in Healthcare
Outcome
Surgeries
Result
Prescribed
drugs
Effect
etc.
State of health
Individual healthcare management contracts
Quality of life
Individual disease management programmes
Intangible asset
Management of investments
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Output
Agenda
1 Some basic facts about German SHI
2 How do sickness funds invest in health?
3 New financial institutions in German SHI
4 Conclusions
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4
New financial institutions in German SHI
Central Health Fund
New World beginning 2009
Employers
Employees
State/Taxes
government-fixed central contribution rate
Central Health Fund
morbidity-adjusted, per capita lump sums (capitation payment)
Sickness fund A
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Sickness fund B
Sickness fund C
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New financial institutions in German SHI
Morbidity-adjusted financing
Example
Inpatient treatment
300 EUR
Drug prescription
2,400 EUR
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Woman, age 62
520 EUR
Woman, age 62
520 EUR
healthy
sick
Total:
3,220 EUR
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New financial institutions in German SHI
Central Health Fund
New World beginning 2009
Employers
Employees
State/Taxes
government-fixed central contribution rate
Central Health Fund
morbidity-adjusted, per capita lump sums (capitation payment)
Sickness fund A
Sickness fund B
Sickness fund C
capitation < expenditure
additional premium by members
capitation = expenditure
capitation > expenditure
repayment to members

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

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New financial institutions in German SHI
External effects
Investment
(based on individual contracts/DMP)
Intangible Asset
Sickness fund
(= Reduction of
morbidity level)
Potential Loss
Return on Investment
(Sickness fund receives less payments
from central health fund)
(Central Health Fund pays
less to sickness fund)
SHI-System
External Effect
(improving financial position
of central health fund)
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Central Health
Fund
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New financial institutions in German SHI
Financial effects of investing in health
Investing in prevention:
Avoiding diseases
Investing in cure:
Making people healthy again
Inpatient treatment
300 EUR
Not getting additional
2,700 EUR
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Drug prescription
2,400 EUR
Loss of additional
2,700 EUR
Woman, age 62
520 EUR
Woman, age 62
520 EUR
Woman, age 62
520 EUR
healthy
sick
healthy
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New financial institutions in German SHI
Results for investing in health
 Sickness funds get paid according to the status quo of
morbidity level
 No consideration of improvement of morbidity or state of
health
 No consideration of efforts needed for improving health
 Calculation of capitation payment with average SHI-data
inhibits individual financing of investemts
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Agenda
1 Some basic facts about German SHI
2 How do sickness funds invest in health?
3 New financial institutions in German SHI
4 Conclusions
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Conclusions
 Successful investments in maintaining, recovering or improving health result in
lower payments from the central health fund
 New financial institutions pay for status quo of high morbidity levels, not
taking into account enormous efforts needed to maintain, recover or improve
health
 Very doubtful, if that‘s the right incentive to follow the overall goal of SHI
 ROI can be expected to be very low or even impossible
 There should be financial institutions established, rewarding investments in
health: the more the morbidity level of insurees decreases, the more
payments a sickness fund should receive and not the other way round
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Thank you for your attention!
Contact: [email protected]
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Some basic facts about German SHI
Financing
 Example:
 Salary: 2,000 EUR x 14.0 per cent = 280 EUR  50 per cent = 140 EUR
 Additional contribution: 2,000 EUR x 0.9 per cent = 18 EUR
 Contribution employer: 140 EUR
 Contribution employee: 140 EUR + 18 EUR = 158 EUR
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Some basic facts about German SHI
Financing
Old World until 31.12.2008
Financial compensation (risk-structure adjustment)
 Compensation criteria: age, sex, income
 Comparrison of defined basic premium (BP) with real financial power (FP)
 Sickness funds with BP < FP pay compensation to sickness funds with BP > FP
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